Welcome to the Weekly Report and a bit of housekeeping. I forgot to enable the link to the bulk of last weeks (free) Report, click here to read the rest of the article.
This week I was going to look at why we suddenly have threats and warnings being issued from the SEC and backed up by utterances from Paulson and Bernanke about short selling but Doug Wakefield and Ben Hill beat me to it. I recommend the article as it raises some very good questions about the motives behind this latest blast of hot air.
So what on earth am I going to write about? Well, rather than get into the fundamentals I am going to look at a few charts, specifically some of those on this list:
The securities identified in the Commission's order:
BNP Paribas Securities Corp.BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
All the following charts are from stockcharts.com to whom I offer my thanks. We begin with the Bank sector:
We see a clear bounce which gives us a new support level at 48.5, albeit from a level lower than the 1998 low of 54.5. I suspect it was the loss of the 1998 support that caused last week machinations and we were right to look at this as an important level. Of more interest was the move and hold above the 2002 support at 60.3, although Fridays candle shows me that some indecision now exists.
Stopped at the 50DMA. You have to go back some time before you see a sustained rally in Citi that did not result in renewed selling. However, if Citi moves above the 50DMA next week then it has room to go higher in the short term.
Bank of America:
A similar story to that of Citi but without the retest of the 50DMA. What we begin to see is that a nice set of parameters are in place to help judge the next move.
GS has been favoured throughout the credit crash and has closed above its 50DMA again. As you can see from February and June, this is no guarantee of further advancement. Notice the last attempt at a sustained move above the 50MDA in April was with the help of a gap up open. I am not convinced yet of a further sustained medium term rally, I would want the 200DMA to be breached too.
HSBC has a more promising bullish outlook, if it can take out the 50 and 200DMA. However as it has shown recently, it is not immune from bearish sector sentiment, even with a large exposure to the Asian markets.
This chart has me nervously eyeing a reversal although the 50DMA has held as support. For me I would need to see the 200DMA breached and a new high established before giving it further consideration.
So much for the SEC supporting an orderly market and routing out false rumours. Has previous support at $20 become resistance? Like Bear Stearns last year there are some........
Subscribers click here to look at the charts of the other Banks and Brokers on the list.